Business China offers China International Cargo Express Company (China Cargo Express
WFOE) and China Logistic Company (China Logistic WFOE) registration and provides NVOCC (Non-Vessel Operating Common Carrier) application for our foreign clients.
What is an NVOCC of a China Logistic Company?
When an international freight forwarder engages in transport and carries out single-mode transport or multimodal transport operations, it has become a carrier because it enters into a transport contract with clients, issues transport documents (FCT, FBL, etc.), and bears liabilities for the transport. However, as it generally owns or possesses no transport vehicles, it can only enter into a transport contract with those carriers who own the transport vehicles for actual transport, and such carrier is generally called Non-Vessel Operating Common Carrier (“NVOCC”). NVOCCs are merely contractual carriers in actual operations, and the carriers that actually complete the transport are actual carriers.
Type of NVOCCs
According to the scope and nature of their business, NVOCCs are divided into the following three categories:
Carrier-type NVOCCs
Such NVOCCs carry out transport activities on their own transport routes, accept the shipper’s goods, issue bills of lading, and bear liabilities for losses of or damages to the goods during the transport. In actual business operations, they are contractual carriers and do not complete the transport themselves. Instead, they can only deliver the goods to actual carriers, receive the goods at the destination and then deliver the goods to consignees.
On-carrier-type NVOCCs
Such NVOCCs engage in trans-shipment. They have their own branches (offices) or agents at major transits and destinations, receive goods from shippers or road transport carriers, and issue bills of lading. Then, they continue to transport, transit and ship the goods to sea carriers, who will complete the marine transport, receive the goods at the destination ports and then deliver the goods to consignees. The main difference between on-carrier-type NVOCCs and carrier-type NVOCCs is that on-carrier-type NVOCCs do not restrict the transport routes, selecting not only appropriate carriers but also the most suitable transport routes.
At present, many shipping companies have a greater reliance on on-carrier-type NVOCCs in terms of cargo canvassing. Therefore, while canvassing goods for themselves and operating trans-shipment business, on-carrier-type NVOCCs actively act as agents of carriers, and handle the acceptance, delivery of goods, container assembling and dismantling, commission, freight collection on behalf of carriers, and get returns and freight difference.
Broker-type NVOCCs
After canvassing goods from different shippers, such NVOCCs generally do not directly provide transport services for shippers. Instead, they take the “wholesale” method, and deliver the goods in batches to on-carriers or carriers according to mode of transport and directions, and then issue bills of lading. Because this practice has obvious broker characteristics, they are called broker-type NVOCCs.
NVOCC’ acting as brokers is a form of transport service that has emerged in recent years. Such NVOCCs generally do not engage in specific business activities or actual service operations. They only engage in the organization of transport, goods distribution, selection of transport modes, routes and improvement of services. Their income mainly includes brokerage fees and t freight difference due to “wholesale”.
Advantage of NVOCCs
1. Directly signing a freight agreement with shipping companies;
2. Issuing ocean bills of lading in the name of own company;
3. Accepting consignment invoices of freight forwarder counterparts;
4. Greatly enhancing enterprise competitiveness on the market.
